Nvidia, identified by the ticker NVDA.O, informed its Chinese clientele about deferring the launch of a new AI chip developed to comply with U.S. export regulations. This delay is anticipated until the first quarter of the upcoming year, as disclosed by two sources familiar with the situation.
The postponed chip, known as the H20, stands as the most potent among three chips specifically designed by Nvidia for the Chinese market to adhere to the latest U.S. export constraints. This setback could pose challenges for Nvidia in maintaining its market presence in China, especially when competing against local contenders like Huawei (HWT.UL).
Initially projected for release around November 16, the launch of the H20 has now been rescheduled for the first quarter of the following year, with one source suggesting a potential timeframe in February or March, as per the sources familiar with the matter. Both sources opted to remain anonymous due to the confidential nature of the information. Nvidia declined to provide any comments on this matter.
Reportedly, the delay in the H20’s release is attributed to complications faced by server manufacturers in integrating the chip into their systems.
In addition to the H20, Nvidia has been devising two other chips to comply with the updated U.S. export guidelines, namely the L20 and L2. While the sources mentioned no delays concerning the L20, its launch is expected to proceed according to the original schedule. However, information regarding the status of the L2 remained undisclosed.
Nvidia is relying on these chips to sustain its market standing in China, especially after being prohibited from shipping various products, including its advanced A800 and H800 AI chips, due to Washington’s tightened export regulations.
The A800 and H800 were introduced as substitutes for Chinese customers in November 2022, approximately a month after the initial U.S. ban on exporting advanced microchips and equipment to China.
While the H20, L20, and L2 incorporate most of Nvidia’s latest AI features, their computing power has been slightly reduced to comply with the new U.S. regulations, as analyzed by SemiAnalysis based on the chips’ specifications.
The U.S. export restrictions have paved the way for competitors like Huawei to secure orders that might have otherwise gone to Nvidia, renowned for its dominance in the AI market with its graphics processing units (GPUs).
According to report earlier this month, the Chinese internet giant Baidu (9888.HK) placed a substantial order for Huawei AI chips. One source indicated that Baidu had done so prior to the announcement of the U.S. restrictions, preparing for a future where procurement from Nvidia might not be feasible.
